From the g7d review working group and others, is to have a very stable value retentive Digital Currency. It will be a very high quality Digital Currency in a number of countries that are currently receiving a lot of their income from abroad. They will now receive a lot of their income from abroad in a Stable Currency that will retain its value. Obviously many of those same third world countries and some than third world have very strict controls on foreign currency. They have currency controls and currency boards and do not allow their consumers to take action outside of their home currency and they do not allow their home currency to be taken out of the country. How does liu brooklyn on dealing with that . Libra plan on dealing with that . There are lots of countries that have the problems you highlighted and do not have currency controls that we can address right away. For other countries it will be on a country by country approach. Any wallet on top of the Libra Network will be interactive with one another. To provide the value we intend we do not need to be the only wallet and in certain regions it will be other wallets but we would still benefit. I thought that was an interesting conversation with my friend from new york about the exclusivity of the wallet, calibra wallet in whatsapp. Would100 members debit and Credit System available as a wallet . We will have a number of other Payment Methods for facebookon the platform or instagram as well including debit, credit cards and other wallets. As far as p2p payments there will be more. There will be competition on p2p payments even on facebook applications . There will be on traditional currencies in the same way that within messenger you can currently use debit cards. Also the chair for the subcommittee on Consumer Protections and Financial Institutions is recognized for five minutes. Mr. Marcus, thank you for your testimony. Say with confidence that niemann brothers, bear stearns and the entire subprime mortgage ecosystem did not set out to bring the Global Financial system to its knees. I can say with confidence that a legitimately Brilliant Minds and ltcm Prize Winners behind did not set out to trigger the Asian Financial crisis but it almost broke global markets. I can say that the deregulation of the early 1980s did not set out to trigger the banking saving and loans crisis. But it did. They all typically founded their logic in innovation, expanding access to Financial Services and arguments of inclusion. Yet they all broke the system. The people at the bottom of the social economic ladder systemically pay the heaviest price. You may be speaking earnestly when you tell us the lofty goals but i was hearing congress when secretary paulson came to us and told us we were within days of a complete shutdown of the Global Financial system. I dont expect you to understand what that was like but i assure it was absolutely terrifying and one of my worst moments in congress. I want america to remain a Global Leader in Financial Services innovation and i believe we have regulators that are the best in the world. Lets assume that facebook even 10 of its current user base to use the libra wallet. Understand that would make you a systemically risky Financial Institution and that we would expect you to be designated as such . And the fed to create a special Regulatory Oversight program for facebook accordingly. Would you agree to this . Congressman, first of all i want to recommit. Yes or no would you agree to this . I want to share that i only have a small amount of time. I want to answer the question to the best of my ability. Of our user base which is 200 Million People using the calibra wallet we would be the same size as many other nonbank payments or wallets around the world including here in the u. S. And another one. You are not answering my question anyone that is Holding Money can be considered a bank. You agree that defined simply an organization that holds deposits and makes loans is a bank . Didlarly, banks in the past issue their own currency or ious and clear payments. Some banks are run as nonprofit organizations or cooperatives are facebook or Libra Organizations planning on establishing Bank Holding Companies with full organization and capital structure required to protect the Global Financial system from Systemic Risk and systemic collapse . We will not engage in Banking Services, will focus on payments. You are taking peoples money right . And you are holding their money, correct . The same way that you have been mowed and paypal and square cash. You arere telling me not going to organize as a bank, you did not answer my first question which will put you under the regulation of others so we can make sure there is no Systemic Risk here because of what you are doing that could bring down the entire federal government the in tire financial the entire Financial Services industry. Let me ask you one more. In doddfrank we established the cfpb to serve as a financial regulator focused specifically on the best interest of consumers. Do you believe that the cfpb currently has authority over the Libra Organization and the Facebook Libra wallet . Dod you not conclude you think cfpb has jurisdiction . Engaged in conversation with all agencies including cfpb. Why did you not include compliance with cfpb in your prepared testimony . Because we are currently engaged with all of these agencies and i wanted to share where we were right now at this point in time with the knowledge we have at this time. We will have a more complete outreach by the time we are ready for launch. Clarification. I understand that you are absolutely opposed to the oversight and that you dont nk they should be allowed i am not opposed to any regulation and we have had conversations with their sock we will move on to the next version. The gentleman from missouri. Thank you. You made a statement a while ago that the Current System is not working. Because i think the Current System is working, it is not working as efficiently as you would like to see it work but i think the system right now works because it is kind of like traffic controls. If you are on a country road and you have cars getting through the intersection you do not need traffic control. If you have an intersection that has 30,000 cars a day going through it you need traffic to protect people for safety purposes and to be able to transact the ability to go through that thing in an efficient way. Talking about the size and scope of money transactions and it costs a little bit of money to be able to transfer money around the world but that is because of safety and security concerns as well as the mechanisms in place to do that. What you are trying to do is take away some of those costs. We are concerned about the safety and a transactional transparency here. The system is working but you would like to improve it as i think what human to say. Is i think what you meant to say. Systemally believe the is not working for way too many people right now. The reason the people who earn less and have the pay more is because of andlation and having kyc aml. I believe we can do that as a lower cost. You said you agree the system is working just not as efficiently as you would like to see it. Something else you said a minute ago. You said you will offer more Financial Services as you go down the road. Just a minute ago you said you want to offer no Banking Services. Which one is it . Are you going to have deposits down the road that you pay interest on . Lendinggoing to have that youre going to be doing to customers . What kind of Financial Services or Banking Services are you intending to go into . It is too early but if we are to engage in the services we will partner with existing banks and Financial Institutions the same way that other Payment Companies have done it. Im talking exclusively about the calibra wallet to be precise. The specificds to ask that you will hold in reserve, who puts the money who puts the assets in to begin with, who owns the assets, what do you do with any dividends or interest or any returns on those investments you make . Who shares in those profits . The way the reserve is built libraconsumers buy into the money they used to buy libra ends up in the reserve and is custody with large banks or potentially a better form of custody depending on the outcome of conversations we are having with the g7 working group and the recommendations that they will come with. The reserve is always proportional to the number of libra coins in circulation. If the reserve generates a return it will be used for keeping two things. Number one to pay for the association and operation of the whole Libra Network. Number two, to return some of to originalnt back investors and backers of a system that will put a lot of resources to get it off the ground. One of the things as we look have a business and i am trying to sell 1000 units to somewhere in france and i want to use the libra system to facilitate this, when i get done with this transaction i have an income and i have to report that to the irs. Is there a cost to change back from the libra to the dollar . So that i can explain to the irs the kind of transaction and money i have earned off this transaction, is there a fee to doing that when you transfer libra to dollars . Congressman, there will be a small fee because there will be agents and exchanges that will be involved in the process of converting fiat into libra and back to fiat. From an irs and tax standpoint as far as the calibra wallet is concerned we will have the proper tools built into the product. The gentleman from georgia is. Ecognized i have listened to your testimony and to the response of several of my colleagues questions here. You keep mentioning your white paper as a defense to an answer to the questions. I want to call your attention to the fact that neither your white paper nor your subsequent Facebook Post offered any concrete details as to how you plan to implement or enforce strong antimoney laundering, knowou plan to enforce your customer protections and most importantly to ensure that is what all of us are concerned about, the safety of our financial citizens. Right now, tell us, what specifically, dont say the white paper, what are you going to do, what do you see as the responsibilities of libra to combat antimoney laundering . To protect our financial systems. Could you tell us right now . Yes. Two parts to that answer. The Libra Association itself, Libra Association will be based in switzerland but will still register and we will have program and guidelines for all the members to enforce k y c standards. Calibra wallet is concerned for every account opened we will ensure that withone kycs appropriately government ids. What about this currently . Fileull responsibility to suspicious activity reports are on our banks or other money which lawusinesses enforcement uses to investigate and prosecute criminal terrorist. Onlyur july post you spoke of the ability for Law Enforcement and regulators to conduct their own analysis of off the chain activities. Do you feel that this represents a shift away from libras own responsibility to monitor and enforce antimoney laundering or customs protections . Know, congressman. No, congressman. The approach libra is taking is using a blockchain and blockchain gives additional visibility too long for smit and regulators compared to the Current System. Of solely depending on banks or regulated entities self reporting. That does not mean that we on the calibra wallet side and all operatorser will not have a strong programs and not file suspicious activity reports. You are marketing this currency as a new entity to Financial Services. New that will surely come and innovative methods of committing financial crimes. These newng criminals are going to find out ways to deal with it. What are you anticipating as some of the new ways that exportls may attempt to and exploit libra for illicit use . And how are you combating to do this . You are planning something new but you also have to have the look down the road but the able to look around corners to see what the criminal has in store for us. What say you . I could not agree more with you. I agree that we could improve on the Current System because we have a chance this time around to think through the way the network is designed and the way the on and off france are properly regulated with proper kyc controls. The proper way to monitor activity and reported with new technology. This new system might be potentially better on these fronts. Thank you, mr. Marcus. The gentleman from michigan is recognized for five minutes. There is so much and so little time. I will try to go through and get to some new territory. I was not planning on doing this but you used the term fiat currency a couple of times. I find it with that meant and it seemed on that you are using that in the way that you were. I went to wikipedia. Withoutrency is a money Intrinsic Value that has been established as money. Have used value and is valued only because the government maintains its value or parties maintain an exchange to agree on its value. We see that people are using cryptocurrencies with no backing. I am curious, why do you feel the need to have a reserve . It strikes me as you are using a fiat currency to create a fiat currency and to have a reserve of that. Reserveeason we have a is that we believe that to create a high quality payment tool we need Digital Currency to and as we have seen with a number of other currencies, Digital Currencies are very volatile and are not a very good medium of exchange for payments. It is a trust issue. It is an inherent quality that money has. If it is stable it is good money but if it is not is not. Becouldnt stability influenced by Peoples Trust levels of currency . Yes and no. You would fit cryptically into washington with the yes and no. It does getting them involved in the financial space. Often times they are not in that space because they have a distrust of Financial Institutions. Timeesnt take anyone much to find issues of trust with a number of companies that are involved in calibra. Im not sure exactly how you are going to address this. To theget back regulatory implications. I have the pleasure of being the chair of the Monetary Policy and trade committee at one point and i am the Ranking Member on a different financial committee. Looking at these Crypto Assets, cryptocurrencies, as the Ranking Member asked, as an Exchange Rated product what is this . It seems it is more of a platypus to me, that it involves in different parts. Are you able to actually the core and essence of a cryptocurrency and asset if you are really under all this regulation . Because weve we can believe that in order for any form of Digital Currency and Payment System to reach allould you like to see other Crypto Assets and cryptocurrencies under the same regulation you are or are you trying to carve out this new product . I cannot speak for other Crypto Assets. If youre looking at it going that is not working for them otherwise why would you come and ask for this regulatory burden. We believe that this is a currency of the comparative other cryptocurrencies it serves a different purpose. This one is to serve as a payment tool. When it reaches so many people we believe that appropriate regulation and oversight is required. You might be a public of American Express travelers checks. Of days of old. Things they were actually paper and you carried them with you. You bought them at a bank and you put in a fiat currency towards it. My time has dwindled. And i have one last quick thing. The chairman had asserted you had not been in contact with the swiss, is that true or not true . Because you and said earlier you have. We have been in touch with them and the other agency was a private agency we have not reach out to. I will follow up with some written questions. The gentleman from colorado is recognized. I will take off where he left off. To help me understand the deal. Have five dollars. I go and buy one token of libra for five dollars. You take that five dollars and what do you do with it . The five dollars you would use to buy libra would end up being in the reserve and so in the current contemplative basket it would mean that 2. 5 would be in the reserve and another 2. 5 would be in a basket of euro, pound, yen. Because the reserve is one